Nobody rides for free in Les Stelmach’s portfolio. The price of admission for any company in the fund he helps to manage is a generous dividend – or at least the potential for a generous dividend. As co-manager of the Bissett Canadian Dividend Fund, his job is to not only find the biggest yields, but also to spot the companies with the ability to grow their dividends before other investors drive up the stock price.
“We try to forecast future cash flows, discount it to the present and derive a value for that business that is independent to the market price” he says. The fund returned 10 per cent last year with the help of a who’s who of established Canadian companies such as the big five banks, which currently pay annual yields between 3.5 per cent and 5 per cent. The banks have become favourites for dividend investors because of their ability to consistently raise payouts.